The Japanese economic transition after World War II can be
divided into the following phases:

· The restructuring
period after the war in 1945 to 1955, followed by a high growth period until two
oil crises occurred in 1973 and 1978;

· The low growth period which
began in mid 1970 and continued until the appreciation of the yen in the mid
1980s;

· The domestic-economy oriented
growth period which began in 1987; and

· The stagnant period, since the
bubble economy which began in 1990.

The rapid economic growth and the rise of the secondary and
tertiary industries in urban areas attracted labour from the countryside, which
resulted in depopulation and changes in the age demographics among upstream
villagers.

In response to the experiences of the past two oil crises,
alternative energy sources to petroleum, such as nuclear and LNG energy have
been developed and promoted. The results show that reliance on petroleum
decreased from 71.9% to 55.8% in 1995, nuclear power use increased from 0.3% in
1970 to 12.0% in 1995, and use of LNG grew from 1.2% in 1970 to 12.8% in 1995.
As the economic situation was sensitive to the reliance on petroleum as the main
source of energy, the efforts to find alternative energy sources will be
continued, particularly after the repeated oil crises caused by the Middle East
Peace Crises between Israel and Palestinian in September/October 2000.

Japan experienced a drastic land tenure system change in the
late 19th century and after the devastation of its land during the Second World
War. Forests cover 67% of the land area, where steep landforms are
characteristic, and closely linked to the life of the Japanese people not only
for wood production, but also for land and water conservation. This is the
result of the people's efforts and experiences accumulated over a hundred years.
69% of the forests are privately owned and mostly managed by small-scale owners.
The remaining 31% comprise national forests.

The total growing volume surpasses that of felling and is
being adequately replenished. The man-made, or plantation, forests, covering
about 10.398 million ha in 1995, are made up of stands in which 70% are less
than 35 years old, and thus have not reached cutting age, and still need tending
and thinning.

Nowadays, Japan is in a position to share its experiences and
to financially contribute to forestry development in other countries. Japan has
contributed substantially to forest and forestry development in other countries
through several channels, including bilateral forestry co-operation (providing
technical and financial support through JICA and OECF) and multilateral forestry
co-operation (contributing to the efforts to achieve sustainable forest
management by providing support to FAO, ITTO, ICRAF, and CIFOR).

Forest resources

According to the 1995 survey, which is carried out in every
five years, the forest area of 24.23 million ha consists of planted forests of
10.40 million ha (41%) and natural forests of 13.38 million ha (53%) of the
total land area respectively. The growing stock of planted forests reaches 1,892
million m3 and natural forests 1,591 million m3.

According to ownership, the forests can be classified into the
following: a) private forests (58%);b) public forests (11%); and c) national
forests (31%). The private forests are owned by individuals, corporations, and
temples or shrines. The total owners of the private forests are 2.9 million
individuals. The Forest Agency manages most of the national forests.

In order to conserve scenic areas and their ecosystems,
natural parks are established under the provisions of the Natural Parks Law. In
the Special Protection Zones of 331,999 ha, cutting or damaging trees are
strictly prohibited. In Class I of Special Zones of 473,040 ha, trees are
protected to the highest degree. Inaddition, Wilderness Areas of
5,631 ha and Nature Conservation Areas of 21,593 ha have been established in
line with the Nature Conservation Law.

The protected areas are mostly natural forests. As of April
1999, the total area of protected forests is 513,739 ha, including the Forest
Biosphere Reserve Area of 320,000 ha and the Plant Community Reserve Forests of
350 locations.

Afforestation activities are focusing on the restoration of
the devastated forests caused by over cutting during the World War II in the mid
1940s and the growing wood consumption. Since 1965, the newly planted area has
tended to decrease because of a shortage of suitable places for afforestation,
inclination toward natural forest management, and the recent decrease in the
financial rate of return in the forestry sector. The area of afforestation was
40 thousand ha in 1998.

In regard to conducting forest improvement, the composition of
the forests should be taken into account as to whether they are single or
multi-storied forests. Three categories of forests have been defined as follows:
a) Improved Single-Storied Forests; b) Improved Multi-Storied Forests; and c)
Naturally Regenerated Forests.

Policy, planning and legislation

There are several important legal and institutional frameworks
for sustainable forest management in Japan, including the following: a) Forest
Law; b) Forestry Basic Law; c) the Law of Administrative and Management of
National Forests; d) Forest Pest and Disease Control Law; e) Nature Conservation
Law; and f) Natural Parks Law.

The Forest Law stipulates the basic provisions for the forest
planning system, the protected forest system, and other forest related issues.
This Law aims at the conservation of lands and their optimum contribution to the
socio-economic development, including enforcing it, toward the achievement of
the sustainable and proper development of the forest resources, and increasing
the forest productivity.

The forest planning system in Japan sets a long-term and
comprehensive policy direction and target for forest and forestry at national,
prefecture, and local levels. It also provides guidelines for forest owners to
plan their forest. The forest planning system aims at stabilising the forest
products market andenhancing their various public benefit functions
through promoting their viability and productivity, taking into account the long
growth period of forests. It ensures effective policy implementation by showing
the basic direction of government policy on forests and forestry, and at the
same time serving as a guideline for forest owners and managers in implementing
forest management.

To maintain the public functions provided by forests, such as
conserving water, preventing natural disasters, protecting/improving the living
environment and providing recreational opportunities, the Minister of
Agriculture, Forestry and Fisheries, or the governors of individual prefectures
designate some forest areas as protection forest (17 types) under
the Protection Forest System. At present, one third of the forest areas,
approximately 8.81 million ha, have been designated as Protection
Forests.

Forests other than protection forests have certain public
functions. The control of the development of the private forestland is carried
out by the Forestland Development Control System.

Each of the prefectures has some forestry specialists and
forestry extension agents who provide technical advice and knowledge concerning
the forest management.

In order to promote the establishment and improvement of
diverse forests as the primary sources of greenery and water, under the severe
social and economic conditions currently faced by forests and forestry, national
and non-national forests are managed in a harmonious and collaborative manner
under common forest planning units based on river basins, in which management
plans for both national and non-national forest are established at the same
time, for the same period, and for similar management goals. The basic structure
of forest plans in Japan is as follows:

· Basic Plan on
Forest Resources and Long Range Demand and Supply Projection for Important
Forest Products. The plan is formulated by the Government in accordance with the
Forestry Basic Law;

· Nation-wide Forest Plan. The
15-year plan is provided every five years in accordance with the Forest Law. It
is formulated by the Minister of Agriculture, Forestry, and Fisheries in
compliance with the above Basic Plan and Projection and approved by the Cabinet
Council;

· Regional Forest Plan. The
10-year plans are provided by every five years in accordance with the Forest
Law. They are formulated in compliance with the Nation-wide Forest Plan by
prefecture governors for non-national forests, and by regional foresters for
national forests;

· Forest Management Plan. The
Five-year plans are voluntarily provided by forest owners for their forests, and
authorised by prefecture governors in compliance with the Regional Forest Plan;
and

· Local Forest Improvement Plan.
Ten-year plans for the management of non-national forests are provided every
five years in accordance with the Forest Law. They are formulated by the
municipal government designated by prefecture governors.

In order to respond to the recent changes, as well as the
prospective development of social and economic conditions surrounding forests
and forestry, the Basic Plan on Forest Resources and Long Range Demand and
Supply Projection on Important Forest Products was revised in November
1996. In this plan, emphasis is put on the enhancement of qualitative values and
the public benefit functions of forests in order to ensure sustainable forest
management. Also in this Plan, it is projected that the domestic supply of
timber would increase in the future, based on the assumption that utilisation of
timber would be expanded as an environmentally and physiologically friendly
material.

In relation to the revision mentioned above, a new Nation-wide
Forest Plan was established in December 1996. The Plan sets forth the basic
policy directions on various aspects, including the management of planted
forests and construction of forest roads, and also provides a set of guidelines
for forest owners and managers. The Basic Plan on Forest Resources of 1996
classified forests into the following functions:

· Timber production

14.90 million ha

· Water conservation

14.67 million ha

· Disaster prevention in
mountainous areas

5.89 million ha

· Conservation of living
environment

4.32 million ha

· Cultural and recreational
activities areas

5.82 million ha

The Forestry Basic Law came into effect in 1964 to set forth
the policy objectives of forest management and basic measures for achieving
these objectives in order to enhance the development of forestry and to improve
the status of forestry workers, as well as to secure forest resources and
conserve lands. The objectives set forth by this Basic Law include a) increasing
production of forest products, b) achieving stable development of forestry by
improving the productivity of forestry, and c) expanding the income base of
forestry workers thereby improving their social/economic status. Based on the
Law, the Government establishes and announces a Basic Plan for Forest Resources
and a Long-Range Demand and Supply Projection for important forest
products.

National forest management objectives set by the Law of
Administration and Management of National Forests are to maintain and promote
public functions provided by National Forests such as conserving land as well as
to achieve a sustainable and reliable supply of forest products. This will
contribute to the promotion of the local industries and the welfare of the local
people living in and near the forests by effectively using National Forest
resources.

The Administrative Law specifies that the Minister of
Agriculture, Forestry and Fisheries must present a 10-year basic management plan
for the National Forests every five years. The Director General of the Regional
Forest Office crafts a 5-year plan for the operation and management of the
National Forest every 5 years based on the 10-year basic management
plan.

The Government implements various measures for controlling and
managing pests, diseases, and harmful vertebrates which would damage the
soundness of the forests under the Forest Pest and Disease Control
Law.

The Nature Conservation Law stipulates basic policies for
nature conservation and provides measures for conservation. The Environment
Agency responsible for the conservation of natural environment develops
administrative measures for nature conservation in accordance with the purpose
of the law.

The Natural Park Law aims at conserving scenic areas and their
ecosystems, enhancing their sound utilisation, and promoting the health,
recreation and the culture of the people. There are three types of natural parks
in Japan, i.e. national parks, quasi-national parks, and prefecture natural
parks. Areas with beautiful natural scenery are designated as natural parks,
regardless of the type of ownership. Thus, many private and natural parks are
included in this category.

Forestry in Japan has become stagnant due to an increase in
imported wood products and the decline in the industry's profitability. These
factors have lowered the management level and the wood supply will be
obstructed. Hence, the public function of forests will be curtailed. With regard
to the various functions of forests where emphasis is given to tourism and
recreational aspects, water conservation, and the biological diversity,
prevention of global warming, the Government has rearranged the forestry
approaches as follows: a) to promote sustainable forest management; b) to strive
for the maintenance of stability and dynamics of the forest ecosystem, and c) to
fulfil a variety of needs in co-operation with the public.

In order to make full use of the various public functions
provided by the National Forests, its management purposes are divided into three
categories as follows: a) forest for soil and water conservation; b) forest for
coexistence between forests and humans, and c) forest for cyclic utilisation of
resources. The forest for lumber production has been reduced from 54% to
approximately 20%. The forests for full utilisation of public functions
increased from 46% to 80%. Consultation with and the participation of the
public, both at national and local levels, should be enhanced during the
drafting and approval of the National Forest plan document.

Global warming

In regard to the Kyoto Protocol, the Government established a
Headquarters on Measures to Arrest Global Warning for which the
Prime Minister inaugurated the chief of the office. A Guideline for Promotion of
Efforts to Prevent Global Warming was finalised in June 1998. Subsequently, the
Central Forest Council recommended a comprehensive policy called Future
Direction of Forest Use: Forest Culture for the 21st Century and the
Creation of a New Society. It gives directions toward the fostering of
forests as one of the measures against arresting global warming, to protect
foothill forests near villages with the help of local people, and to propel a
national land afforestation movement with public participation.

In order to cope with various demands for forest functions
from the public, the Government has undertaken the following measures: a)
education for understanding the forest environment; b) activities that encourage
people's visits to forests, such as woodlands near settlements and protecting
the environment; c) direct public participation in planting trees and
establishing forests; and d) development and active use of forest recreation
sites and facilities to provide good physical and mental health.

Within the National Forests, 1,270 recreational forests have
been delineated. These include the Recreation in Nature Forests
where people can appreciate the natural beauty of forests throughout the four
seasons, outdoor sports facilities where people can enjoy skiing and camping,
and Nature Observation and Education Forests for observing nature
and wild birds. In 1998, 160 million people visited these recreational
forests.

Forest fires

In 1998, about 1,900 cases of forest fires occurred in Japan
and approximately 800 ha of forests burned down. Most of the fires were
caused by the imperfect extinction of bonfires and cigarettes butts. In regard
to forest fires, several measures have been undertaken by the Government,
including the following: a) forest fire prevention campaigns to make people more
conscious of forest fires; b) arranging protection/operation systems by
establishing forest patrol teams and distributing forest fire prevention
equipment; and c) developing fire break forests and forest roads.

Public participation in forest management

Several approaches/schemes have been introduced to promote
public participation in forest management including: a) profit sharing forests;
b) a land afforestation campaign; and c) providing opportunities for voluntary
participation in forest-related activities.

Within the profit sharing forest scheme, people under contract
with the Government plant trees in National Forest sites. Profits gained from
the sale of lumber is shared between the Government and the contractor. This
system promotes co-operative efforts between the upstream and downstream
communities such as improvement of headwater forests and the fishermen's forest
system.

Through land afforestation campaigns such as the
Forestry Fund for Green and Water and Green Feather Fund
Raising, the Government encourages the public to participate in
afforestation activities, including National Arbor Days and silvicultural
festivals. These activities will pave the way to a better understanding of
coexistence between forests and humans, prevention of global warming, and the
role of forests in the socio-economic and environmental development of the
country.

Starting from 1999, one or two encountering
forests are to be established in each Forest District Office so that
people can voluntarily participate in fostering forests.

Wood production and trade

Japan is one of the worlds's largest importing countries of
wood, where 70% of the domestic wood consumption is imported. The import of logs
has decreased while the import of sawn wood has increased. Production of wood
from domestic forests has tended to decrease.

Wood consumption was 117 million m3 in 1973. It reached only
92 million m3 in 1998. Japan was the biggest tropical wood importing country,
amounting to 12% of the domestic consumption in 1998.

Wood production has gradually decreased; it was 52.741 m3 in
1967 and 19.33 million in 1998. The number of forestry employees was 140
thousand in 1985, but only 86 thousand in 1995.

Imports of timber have shifted from logs to processed wood
products. In 1989, the import of logs was 35.192 million m3, sawn wood was
12.882 million m3, and plywood was 4.312 million m3. In 1998, the import of logs
was only 18.597 million m3 (decreasing by 53% compared to imports in 1989), sawn
wood was 10.582 million m3, and plywood was 6.082 million m3 (increased by
238%).

Under the Uruguay Round Agreement, Japan committed to reduce
tariffs by approximately 50% of the base rate on trade-weighed averages,
equivalent to an approximately 30% decline from the applied rate when the
Agreement was made in 1994. It was implemented progressively every year from
1995 to 1999.

In regard to global environment issues, the next trade
negotiations on wood products of Japan should be carried out as part of
comprehensive negotiations and due consideration has to be given to the global
environmental issues and sustainable resource use.

Wood prices increased in 1996 due to an increase in house
building demand. But overall the trend continued to decrease. ITTO conducts a
special monitoring of wood prices in Japan and elsewhere. The ITTO web site can
be visited for more details.

International co-operation

In providing development assistance to developing countries,
the environmental factor is the most important consideration. This was clearly
stated at UNCED in 1992. In addition, Japan is implementing the ODA on forest
and forestry matters through multilateral organisations, such as UNEP, FAO,
CGIR, and ITTO.

At the UNGASS in 1997, Japan announced and introduced the
Kyoto Initiatives and the Initiatives for Sustainable Development
(ISD) which established that Japan would continue to actively support policy
works on sustainable forest management and to assist the developing countries to
undertake measures against the Global Warming. However, the Japanese Government
is of the view that it is important for each country to make further efforts to
achieve sustainable forest management.

In regard to bilateral co-operation, Japan is implementing
different approaches, including project-type technical co-operations,
development studies and yen loans. The amount of bilateral ODA in the field of
forestry was Yen 15.8 billion in 1991, Yen 16.9 billion in 1993, Yen 25.2
billion in 1995 and Yen 22.3 billion in 1997. Recently, Japan has agreed to
support four countries in the Region, China, Myanmar, the Philippines and
Thailand to launch a project on Model Forests.

In regard to criteria and indicators, Japan has been actively
involved in the development of criteria and indicators (C&I) for sustainable
forest management for the temperate and boreal forests (Montreal Process). One
of the unique efforts carried out by Japan is a project in two watershed areas
to develop criteria and indicators at the local level and the monitoring
methodologies. In addition, a new nation wide Continuous Forest Inventory (CFI)
has been initiated to monitor and assess forest resources and their dynamics
using unified methodologies, taking into consideration of its compatibility with
C&I of the Montreal Process.